TODAY’S FAYRE – ‘THE GOOD WIFE’ to AUTUMN STATEMENT, to CARNEY to ROLLS ROYCE to MARKETS

TODAY’S FAYRE – Wednesday, 25th November 2015

 

“What is it to grow old?

Is it to lose the glory of the form,

The lustre of the eye?

Is it for beauty to forego her wreath?

 

Yes, but not for this alone.

Is it to feel our strength –

Not our bloom only, but our strength -decay?

Is it to feel each limb Grow stiffer, every function less exact,

Each nerve more weakly strung?

 

Yes, this, and more! but not,

Ah, ’tis not what in youth we dreamed ‘twould be!

‘Tis not to have our life Mellowed and softened as with sunset-glow,

A golden day’s decline! ‘Tis not to see the world

As from a height, with rapt prophetic eyes,

 

And heart profoundly stirred;

And weep, and feel the fulness of the past,

The years that are no more! It is to spend long days

And not once feel that we were ever young.

It is to add, immured In the hot prison of the present, month

To month with weary pain. It is to suffer this,

And feel but half, and feebly, what we feel:

 

Deep in our hidden heart Festers the dull remembrance of a change,

But no emotion -none. It is -last stage of all –

When we are frozen up within, and quite The phantom of ourselves,

To hear the world applaud the hollow ghost

Which blamed the living man.

 

Matthew Arnold – poet – 1822-1888

 

“In times of change learners inherit the earth; while the learned find themselves beautifully equipped to deal with a world that no longer exists.”- Eric Hoffer – US philosopher – 1898-1983

 

“I don’t make jokes. I just watch the government and report the facts.” – Will Rogers – US humourist, cowboy and actor – 1879-1935

 

Done! Finished! Mission accomplished! What? – All six series of “The Good Wife.” There’s nothing like a bit of decadence in one’s life, such as slobbing in front of the television, enjoying an unrealistic world of fantasy and that’s what we’ve been doing in spades in the last two months and we have relished every minute of it. This TV series, which is about a Chicago based law firm with plenty of political nuances and tricky personal relationships really ‘floated our boat!’ Series seven starts on Netflix in early January – Cannot wait!

 

Turkey’s air space may well have been invaded by Russian fighters with monotonous regularity – of that I have little doubt. Russia invades our airspace here in the UK not infrequently. However surely there is no need for one of Turkey’s F16 fighters to shoot down a Russian military jet? What the hell was Turkey thinking of? Turkey and Russia are both UN members and Turkey is hugely reliant on Russia for energy. President Putin may well be a despot, but that was an act of total madness, which could well damage cooperation with the West against ISIS and Syria.

 

The Budget and the Autumn Statement are not what they were 20-50 years ago when we used to wait to see what joys and ‘goodies’ Messrs Callaghan, Healey, Jenkins, Howe, Lawson, Lamont and even Clarke had in that grubby little red box. We used to wait with awe, trepidation and excitement at not only the delivery of their respective speeches, but also the public reaction. Now, the content is so professionally and surreptitiously leaked to the media, it is often hard to raise more than a modicum of enthusiasm.

 

We are led to believe that there will be few ‘sweeties’ in the Chancellor’s battle scarred red box. To attract positive comment away from necessary austerity and continued cuts in the budget deficit (£20 billion), which George Osborne understandably is committed to, the bone he has thrown to the ‘madding crowd’ is likely to be greater access to affordable housing. He is hopeful that the Government’s offering of a £6.9 billion programme to build 400,000 new homes will placate the public’s outrage to the £4.4 billion raid on tax credits, particularly the lower-paid and the ‘needy.’ A few scragg-ends totalling about £500m will be offered to various rail and transport networks.

 

However rest assured the Chancellor is unlikely overall to be in a charitable mood. The books need to be balanced. Terrorist attacks have necessitated an increase in spending for defence and police protection. This has to be paid for. So housing benefits may well come under siege. Budgets for BIS, Department of Justice, HMRC, Environment and the Home Office are likely to face an average 27% cut in their respective budgets! This will be a draconian statement. Though infrastructure expenditure likely to rise sharply it is hard to justify the massive long term £90 billion HS2 project. How can that be priority?

 

Yesterday in the wake of Turkey’s irrational behaviour, geopolitical issues went to the top of the agenda. Oil prices rose by about 3%, which benefitted the likes of BP, Shell, Eni and Total. However airlines such as IAG, Ryanair and easyJet and travel companies (Tui, Thos Cook and Carnival) suffered the slings and arrows of outrageous fortune. Hotels were also on the back foot. Consequently the FTSE put in an unremarkable performance losing 27 points at 6277. On the Street of Dreams all three major indices finished the session just above the Plimsoll line thanks to energy and oil, but inertia soon set in. Delta and other airlines fell by an average of 3%. Asia response was ruefully neutral. The ASX closed down 0.63% and the NIKKEI’s colours were lowered by 0.39%. Chinese markets were enjoying mixed fortunes – Shanghai Composite +0.74% and the Hang Seng was down 0.40% just after lunch.

 

In his testimony to the Treasury Select Committee, Governor Mark Carney was rather more circumspect about interest rates and the prospect for a rise. Significant global data will be posted by 17th December, hopefully allowing a logical decision to prevail. A lack of inflation is not helping the cause of a rate hike.  However, a strong pound and wage inflation should help to push inflation from -0.1% to 1% by the summer of 2016. He also expressed concern at the alarming expansion level of consumer loans and it is possible that greater capital requirements for banks will be implemented to stop the flow.

 

Rolls Royce posted its structural plans yesterday with about £200 million of cost cuts and 3600 redundancies. Panmure’s Sanjay Jha is of the opinion that CEO Warren East’s view on the management structure has yet to be completed; hence there appears to be insufficient data about the company’s future in the next 2 years. It is possible that a cash call of between £2-3 billion may be required.

 

This morning there was another slew of results with good efforts from Thos Cook, Betfair, Britvic and RPC Group. United Utilities and Hogg Robinson’s efforts were adequate. At 8.40am the FTSE 100 was up 35 points at 6310

 

UK companies posting results – Wednesday – BRITVIC, DMGT, UNITED URILITIES, HOGG ROBINSON, THOS COOK, BETFAIR, RPC GROUP, Thursday – SEVERN TRENT, PAYPOINT, LONDONMETRIC, SSP, MARSTON’S, Friday – SVG CAPITAL, PENNON

 

US companies posting results this week – Wednesday – DONALDSON

 

ECONOMIC DATA – Wednesday – BBA applications (UK), MBA MORTGAGE APPLICATIONS (US), AUTUMN STATEMENT, Thursday – INITIAL JOBLESS CLAIMS, Friday – UK CONSUMER CONFIDENCE

 

David Buik

 

Market Commentator – Panmure Gordon & Co

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